No unjust enrichment if Appellant borne the incidence of SAD & not passed the same to customers

Marina Enterprises Vs Commissioner, Customs, Central Goods & Service Tax and Central Excise (CESTAT Delhi)

Admittedly the appellant have sold the goods in India after importing and have paid sales tax on the said goods. Admittedly, they are registered with the Sales Tax Department having TIN number and have charged sales tax in their sales bill. Further, from the sample copy of sales bill produced before this Tribunal, it is evident that appellant have not given break-up of additional duty or SAD in their sale bill. Further, the appellant have mentioned on the body of sale invoice that – no benefit of additional custom duty levied under sub­section (5) of Section 3 of the Customs Tariff Act shall be admissible.

Thus, evidently the buyer of the goods from the appellant cannot take the benefit or credit of SAD of Customs, which was paid by the appellant – importer at the time of import.

Considering the rival contentions and in the facts and circumstances, it is evident that it is the appellant – importer who has borne the incidence of special additional duty (SAD) and has not passed on the same to the buyer of the goods.

Accordingly, I find that the learned Commissioner (Appeals) have erred in holding that the refund claim was hit under the doctrine of unjust enrichment. Accordingly, this appeal is allowed and the impugned order is set aside. The appellant is held entitled to refund of the amount of SAD Rs.5,43,443/-.

FULL TEXT OF ORDER OF CESTAT DELHI

Heard the parties.

2. The issue in this appeal is whether the refund claim of Special Additional Duty (SAD) by the appellant – importer, whether the same is hit by unjust enrichment.

3. The appellant imported goods for resale. Being entitled to refund of SAD, which is deposited at the time of import in lieu of sales tax, the same is refundable when the importer subsequently sells the goods in India and thereafter deposits sales tax with the Sales Tax Department. Upon such resale, the appellant became entitled to refund of the SAD in terms of Notification No. 102/2007-Cus. dated 14.09.2007. The appellant has filed refund claim on 21.08.2017 as under:-

4. The refund claim was examined and adjudicated and the Assistant Commissioner recorded the following finding:-

“10. To sum up, the importer had paid all the import duties including the 4% Additional Duty at the time of importation of the subject goods and at the time of sale thereof in the local market he has specifically indicated that no cenvat credit would be admissible against the said sale invoices. Further, the VAT payable on sale of the said goods has been paid by the importer. Hence, the importer has fulfilled all the conditions stipulated in the Notification No. 102/2007-Cus. dated 14.09.2007 and, therefore, is eligible for the refund of Additional Duty of Customs paid at the time of importation.

11. I observed that the refund claim amount is more than 5 lakh and accordingly OIO and refund claim file was sent to Audit Branch Hqrs. Ujjain for pre-audit of the same and the same was approved in pre-audit as informed vide Hqrs., letter F. No. III(20)/Pre Post-AUN/209/17-18/7756 dated 04.10.2017.

12. In view of my above findings, I order as under:-

ORDER

I hereby sanction cash refund of Rs. 5,43,443/- against Bill of Entries No. 6489992 dated 25.08.2016 and 6490008 dated 25.08.2016 to M/s Marina Enterprises, 49, Kothari Market, Ratlam (M.P) towards payment of 4% Additional Duty of Customs.”

5. Subsequently Revenue issued show cause notice dated 10.09.2018 alleging that one of the documents relied upon by the appellant in support of their claim of SAD, was a certificate issued by the Chartered Accountant – M/s Chirag Jain & Associates of Rohtak, Haryana, who had certified – that the importer has not passed on the burden of additional duty to the buyer as required for the examination of unjust enrichment. Further certified that the appellant have paid necessary VAT / Sales Tax payable against the sale of imported goods.

6. According to Revenue, in the course of subsequent enquiry by DRI, Sh. Chirag Jain, C.A. has disowned the said certificate has not been issued by him and the same appears to be fake, bogus and fictitious. Accordingly, show cause notice was issued requiring the appellant to show cause as to why the refund amount granted Rs.5,43,443/- should not be recovered under Section 28(4) of the Act alongwith interest and further penalty was proposed under Section 114AA.

7. In the earlier round of litigation this matter had travelled to this Tribunal and the Tribunal had remanded the matter for a decision on merit. The appellant contested the matter before the Commissioner (Appeals) on the ground that, C.A. certificate it is not an essential requirement for sanction of the SAD refund, in terms of the said notification as amended. It was further urged that admittedly the appellant have sold the goods in India after importing and have paid sales tax on the said goods. Admittedly, they are registered with the Sales Tax Department having TIN number and have charged sales tax in their sales bill. Further, from the sample copy of sales bill produced before this Tribunal, it is evident that appellant have not given break-up of additional duty or SAD in their sale bill. Further, the appellant have mentioned on the body of sale invoice that – no benefit of additional custom duty levied under sub­section (5) of Section 3 of the Customs Tariff Act shall be admissible.

8. Thus, evidently the buyer of the goods from the appellant cannot take the benefit or credit of SAD of Customs, which was paid by the appellant – importer at the time of import.

9. Considering the rival contentions and in the facts and circumstances, it is evident that it is the appellant – importer who has borne the incidence of special additional duty (SAD) and has not passed on the same to the buyer of the goods.

10. Accordingly, I find that the learned Commissioner (Appeals) have erred in holding that the refund claim was hit under the doctrine of unjust enrichment. Accordingly, this appeal is allowed and the impugned order is set aside. The appellant is held entitled to refund of the amount of SAD Rs.5,43,443/-.

11. In the result, the appeal is allowed. The impugned order is set aside.

(Dictated and pronounced in open Court).